Cattlemen suffering from rising feed prices

July 1, 2008

By Sharna Johnson, Freedom New Mexico

With the rising cost of corn and other grains, local cattle growers are struggling to stay afloat.

U.S. beef producers now spend a whopping 60-70 percent of their production costs on animal feed and are seeing that number rise daily as corn prices hover near an unprecedented $8 a bushel, up from about $4 a year ago.

“This is not sustainable. The cattle industry is going to have to get smaller,” said James Herring, president and CEO of Amarillo, Texas-based Friona Industries, which buys 20 million bushels of corn each year to feed 550,000 cattle.

Corn prices were already rising before the Midwest floods, driven up 80 percent over the past year as developing countries like China and India scramble for grains to feed people and livestock. U.S. production of ethanol, an alternative fuel that can be made with corn, has also pushed prices higher, prompting livestock owners to lobby Washington to roll back ethanol mandates.

Bob Sims, owner of Tri-State Cattle Feeders in Hereford, Texas, said he decided to sell his feedyard last winter when costs started overtaking profit.

Sims said his lot is one of the smaller operations, feeding a maximum of 15,000 cattle to get them up to size before they are sold to the meat packing plants.

“You can’t feed 14 dollars worth of corn to an animal that brings a dollar,” he said. “I did not see it coming. Not to this magnitude.”Cattle losses can run more than $150 a head, he said, after the costs of feeding.

“Something really outstanding’s got to happen … there’ve got to be enough people out there to buy beef; to want it worse than they want it now,” he said.